Plaintiff Nippon Fire & Marine Insurance Co., Ltd. ("Nippon") was the
insurer of three shipments made by Toshiba America Information Systems,
Inc. ("Toshiba") through Skyway Freight Systems, Inc. ("Skyway"). In each
of the first two shipments, Skyway subcontracted with another carrier
— U.S. Airways, Inc. ("USAir") on the first shipment and United Air
Lines, Inc. ("United") on the second shipment. Skyway made the third
shipment itself by truck. None of the shipments were delivered complete.
Skyway and the sub-contracting carriers now move for summary judgment.
For the reasons stated, the motions are granted.

BACKGROUND

The following facts are undisputed. Skyway is an interstate common
carrier that made three shipments for Toshiba, a manufacturer and
distributor of laptop computers, from Toshiba's facilities in California
to either New Jersey or Florida. The definition section of Skyway's
tariff indicates that "Service Level means 3S (3-day), Standard (2-day)
or Emergency (1-day) air freight service or Express Truck service." For
most cities, Express Truck Service requires delivery within 2 to 5
business days after pick-up. The Skyway bills of lading filled out by
Toshiba state that the shipments are subject to Skyway's tariffs in
effect at the time of the shipment. The appropriate tariff contains the
following limitation of liability clause:

Declared Value — Air

A shipment will have a declared value of 50 cents per
pound or $50.00, whichever is higher, unless a higher
value is declared on the Airbill at the time of
receipt.

(Emphasis supplied.) The airbills issued by Skyway contain boxes that
permit Toshiba to declare the value of the goods. If it had declared a
value, the fee for shipping the goods would have been increased at a rate
dependent on the value declared. The tariff provides that "Skyway's
liability shall, in no event, exceed the declared value of the
shipment. . . ."

The tariff authorizes Skyway, "exercising due diligence in order to
protect all property accepted for transportation, [to] determine the
routing of all shipments." Skyway is also authorized to

substitute common motor carrier transportation, in
order to expedite delivery, under the following
conditions:

1. When a shipment, because of its size, weight or
contents, cannot be accommodated on aircraft over
some portion of its routing; or,

3. When a shipment will be unreasonably delayed
because, on some portion of its routing, the volume
of cargo on hand exceeds the capacity of aircraft
departing within reasonable time.

The tariff also specifies claim procedures in the event that a shipment
is lost or damaged. The tariff states that "All claims (except
overcharge) must be made in writing to Skyway within 270 days after the
date of acceptance of the shipment for transportation." Nonetheless, the
tariff requires that "[c]laims for concealed loss or damage must be
reported to Skyway within 12 days after delivery of the shipment. . . ."
Concealed loss is defined as "that which could not have been noticed at
the time of delivery."

First Shipment — USAir

On January 28, 1997, Toshiba shipped 54 cartons of data processing
machines from California to Toshiba's consignee in New Jersey (the "First
Shipment"). On the bill of lading, Toshiba selected "SS-SKYWAY ST 2 DAY"
or Skyway's standard two day service. Toshiba left the declared value
line blank but did declare a weight of 864 pounds.

On January 29, 1997, Skyway shipped the First Shipment from California
to Pennsylvania through common carrier USAir using its Air Express
service. USAir issued its own air waybill that shows that the box
"Declared Value for Carriage" was left blank and reflects a weight of 939
pounds. USAir's relevant limitation of liability clause states that
USAir's total liability shall not exceed $.50 per pound. USAir lost the
shipment, which was never delivered to Skyway or to the consignee.

Second Shipment — United

On February 28, 1997, Toshiba made a second shipment of 25 cartons of
data processing machines from California to the same consignee in New
Jersey, again via Skyway's standard two-day air service (the "Second
Shipment"). Toshiba did not declare a value on the Skyway bill of lading
but did declare a weight of 375 pounds.

On March 1, 1997, Skyway shipped the Second Shipment from California to
Pennsylvania through air carrier United. United's relevant limitation of
liability clause states that a shipment has a declared value of 50 cents
per pound unless a higher value is declared. According to the air waybill
issue by United, Skyway used United's general freight service, and the
cartons were combined into a shipment totaling 1095 pounds. The waybill
also states that all claims must be made within nine months and nine days
of the date of acceptance. United lost 13 of the 25 cartons. The
consignee received the 12 cartons that were not lost on March 4, 1997. No
claim was ever made to United by Skyway.

Third Shipment — Truck

On July 31, 1997, Toshiba shipped another 33 cartons of data processing
machines from California to Toshiba's consignee Computer City in Florida
(the "Third Shipment"). This time, Toshiba selected "SE-SKYWAY 3S (3
DAY)" delivery, or Skyway's standard three day delivery, on the bill of
lading. Toshiba did not declare a value on the Skyway airbill but did
declare a weight of 396 pounds. At least part of the shipment was
delivered and an employee of Computer City signed a delivery receipt on
August 6, 1997. That receipt noted that 10 pieces were received.
Nonetheless, these ten pieces were apparently only 10 of the original 33
cartons. Skyway received a report of a shortage for the undelivered
cartons on September 12, 1997.

As agreed at a conference with the parties on May 21, 1999, and as
memorialized in this Court's Order of the same day, any motion brought in
this action was required to be filed by June 11. In accordance with this
schedule, Skyway moved for partial summary judgment against Nippon on all
three shipments to limit its liability to the amount stated in the bills
of lading. Both USAir and United moved for summary judgment against
Nippon. USAir moved for partial summary judgment against Skyway to limit
its liability to the amount specified in its air waybill. United moved
for summary judgment against Skyway. For the reasons stated, Skyway's
motion is granted in part and denied in part. The motions of USAir and
United are granted in full.*fn3

DISCUSSION

Summary judgment may not be granted unless the submissions of the
parties taken together "show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the
burden of demonstrating the absence of a material factual question, and
in making this determination the Court must view all facts in the light
most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp.
v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
When the moving party has asserted facts showing that the non-movant's
claims cannot be sustained, the opposing party must "set forth specific
facts showing that there is a genuine issue for trial," and cannot rest
on the "mere allegations or denials" of his pleadings. Rule 56(e),
Fed.R.Civ.P.; accord Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522,
525-26 (2d Cir. 1994). In deciding whether to grant summary judgment,
therefore, this Court must determine (1) whether a genuine factual
dispute exists based on the evidence in the record, and (2) whether the
fact in dispute is material based on the substantive law at issue.

1. Admissibility of Wilkins Affidavit

In connection with the motions for summary judgment, Nippon has
provided an affidavit from Barry Wilkins, a specialist in losses in
manufacturing and distribution. Defendants argue that the Court should
not consider the affidavit because the plaintiff indicated in response to
interrogatories that it had not retained any experts and that no expert
disclosure has been provided. In a sur-reply letter to the Court,
plaintiff argued that both its answer to the interrogatories and Rule 26,
Fed.R.Civ.P., should only apply at trial.

The legal issues raised by the First and Second Shipments are largely
the same as those decided by this Court in Nippon Fire & Marine Ins. Co.
v. Skyway Freight Systems, Inc. ("Nippon I"), 45 F. Supp.2d 288
(S.D.N.Y. 1999). Skyway, USAir, and United argue that under Nippon I, the
liability of each is limited by its limitation of liability clause.
United also argues that any claim against it by either Nippon or Skyway
is barred by the claim procedure specified in its contract of
carriage.*fn5 In response to the motions for summary judgment, Nippon makes
three arguments. Nippon argues first that Nippon I was wrongly
decided to the extent it barred recovery by the shipper from a
subcontracting carrier under principles of tort law. Second, it argues that
Skyway is liable since it agreed to assume warehouseman's duties when it
elected to store the goods rather than ship them. Finally, Nippon argues
that under the material deviation doctrine, Skyway may not assert its
limitation of liability clause.

Nippon I held, inter alia, that a subcontracting
common carrier operating pursuant to its own airbill
containing a valid limitation of liability issued to
the primary common caner . . . is not liable in tort
to the original shipper.

Nippon I, 45 F. Supp.2d at 293. In arriving at this holding, the Court
gave consideration to the duties of a common carrier, as well as the
expectations of both the subcontracting carrier and the shipper. Id. at
293-94. None of the authorities now cited by Nippon alter the validity of
this holding or its applicability to the present facts.

Nippon further argues that the material deviation doctrine applies to
both the First and the Second Shipments. In Nippon I, this Court followed
Praxair Inc., v. Mayflower Transit, Inc., 919 F. Supp. 650, 655-56
(S.D.N.Y. 1996), which stated that

See Nippon I, 45 F. Supp.2d at 292-93. Nippon primarily argues that the
"Standard" 2 day delivery term is such a promise and that the failure to
deliver the First Shipment and part of the Second shipment as well as the
delay in the Second Shipment constitute material deviations. The request
for 2 day delivery — still not Skyway's fastest level of service
— does not create an exemption from the limitation of liability.
See, e.g., Hill Constr. Corp. v. American Airlines, Inc., 996 F.2d 1315,
1319 (1st Cir. 1993) (finding doctrine not to apply because of "no breach
of a special transport promise" and "no deviation from the kind of thing
one might expect to find when a carrier has lost, damaged, or delayed
cargo") (internal quotation omitted); United States Gold Corp. v. Federal
Express Corp., 719 F. Supp. 1217, 1225 (S.D.N.Y. 1989) (citing cases
upholding validity of limitation of liability with respect to express
carriers). None of the cases cited by Nippon are to the contrary.*fn7
See, e.g., Coughlin v. TWA, 847 F.2d 1432, 1433-34 (9th Cir. 1988)
(breach of special contract provision to carry valuables in cabin) (per
curiam); Nissan Fire & Marines Ins. Co. v. North American Van Lines,
Inc., No. C-96-03621-VRQ, 1997 WL 81179 (N.D.Cal. 1997) (recognizing
validity of doctrine, but finding that the number of drivers is not such
a safety measure); Information Control Corp. v. United Airlines Corp.,
73 Cal.App.3d 630, 641, 140 Cal.Rptr. 877 (1977) (applying doctrine where
carrier made promise to place computers on specific flight); Philco
Corp. v. Flying Tiger Line, Inc., 18 Mich. App. 206, 171 N.W.2d 16,
24-25 (1969) (applying doctrine to promise to store computers upright).

Finally, the rule proposed by Nippon would eviscerate the
well-established limitation of liability principle. As described by then
Judge Breyer, limitation clauses provide a number of benefits, including
lower shipping rates for the shipper and avoidance of unforeseeable risks
for the carrier. Hill, 996 F.2d at 1317. If a material deviation were
found here, whenever 2 day delivery is requested and there is loss or
delay, the contract of carriage would be rescinded and the carrier would
be liable for the full loss. Because any loss would result in the "delay"
described by Nippon, the commercial benefits of limitation of liability
clauses would be entirely eliminated.

In summary, Nippon does not contest the general enforceability of the
limitation of liability provisions contained in the bills of lading, and
each of the specific bases for challenging those provisions is without
merit. As a result, with respect to the First Shipment, USAir is not
liable to Nippon. Skyway and USAir may enforce their limitation of
liability clauses. Skyway's liability to Nippon is limited to $432;
USAir's liability is limited to Skyway to $432. With respect to the
Second Shipment, United is not liable to Nippon. Skyway has also conceded
that it has no claim against United. Skyway may enforce its limitation of
liability clause; Skyway's liability to Nippon is limited to $97.50.

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